Week 2 Group Problems CUSP 200
Student: ___________________________________________________________________________
1.
Refer to the graph above. At a price of 90 cents per dozen:
A.
B.
C.
D.
2.
there is a shortage of 2,000 dozen eggs per week.
there is a surplus of 2,000 dozen eggs per week.
quantity demanded is just equal to quantity supplied.
there is a shortage of 1,000 dozen eggs per week.
Which of the following is not held constant as you move along the demand curve?
A.
B.
C.
D.
The price of that good.
The price of other goods.
The incomes of consumers.
The preferences of consumers for the good.
1
3.
Refer to the graph above. The relevant market is corn. The impact of a poor corn harvest on the market for
corn would most likely be demonstrated by which graph above?
A.
B.
C.
D.
4.
Graph A
Graph B
Graph C
Graph D
Assume the graph above reflects demand in the automobile market. Which arrow best captures the impact
of increased consumer income on the automobile market?
A.
B.
C.
D.
A
B
C
D
2
5.
Refer to the graph above. The arrow that would best illustrate the impact on consumers of reducing sales
tax on a good paid by suppliers is:
A.
B.
C.
D.
6.
If the price of movies on VHS rises while the price of movies on DVD remains the same, the law of
demand predicts that consumers will:
A.
B.
C.
D.
7.
substitute movies on VHS for movies on DVD.
substitute movies on DVD for movies on VHS.
buy only movies on VHS.
buy only movies on DVD.
When the going rate is $2.00 per hour, Ann wants to baby sit 6 hours each week and Pat wants to baby sit 4
hours each week. If the rate goes up to $4.00, Ann and Pat both double the number of hours they are willing
to baby sit each week. Based on this information, a combined supply curve will pass through the points:
A.
B.
C.
D.
8.
A
B
C
D
price = $2.00, quantity supplied = 20 and price = $4.00, quantity supplied = 10.
price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20.
price = $2.00, quantity supplied = 6 and price = $4.00, quantity supplied = 4.
price = $2.00, quantity supplied = 4 and price = $4.00, quantity supplied = 6.
Compared to last year, fewer oranges are being purchased and the selling price has decreased. This could
have been caused by
A.
B.
C.
D.
an increase in demand.
an increase in supply.
a decrease in demand.
a decrease in supply.
3
9.
Refer to the graph above. The arrow that best shows an increase in supply is:
A.
B.
C.
D.
W
X
Y
Z
10. The more the current price exceeds the equilibrium price, the:
A.
B.
C.
D.
greater the resulting shortage will be.
smaller the resulting shortage will be.
greater the resulting surplus will be.
smaller the resulting surplus will be.
11. Refer to the graph above. An increase in foreign demand for U.S. assets would cause a shift from:
A.
B.
C.
D.
S1 to S2.
S2 to S1.
D1 to D2.
D2 to D1.
4
12. Refer to the graph above that depicts a third-party payer market for prescription drugs. What is the cost of
this program to the third-party if a $2 co-pay is established?
A.
B.
C.
D.
$270
$240
$180
$120
13. Taxi medallions were issued in New York City to:
A.
B.
C.
D.
help commuters afford transportation.
increase the wages of taxi drivers.
help new immigrants find jobs.
raise revenue for the city.
About 10,000 tickets for the 2005 Men's Final Four college basketball games at the St. Louis Edward Jones
Dome were sold in a lottery system for about $120 apiece. A year before the game, scalpers were already
offering to sell tickets for between $200 and $2,000, depending on seat location, even though the practice is
illegal.
14. The evidence suggests that the equilibrium price of a ticket is:
A.
B.
C.
D.
$120.
between $120 and $130.
between $200 and $2,000.
more than $2,000.
15. If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for
gasoline is downward-sloping, the supply of gasoline will:
A.
B.
C.
D.
shift upward and the price will increase by $0.25 per gallon.
shift upward and the price will increase by less than $0.25 per gallon.
shift downward and the price will decrease by $0.25 per gallon.
shift downward and the price will decrease by less than $0.25 per gallon.
5
16. Refer to the graph above that depicts a third-party payer market for prescription drugs. What happens to
total expenditures in this market if a $2 co-pay is established compared to a free-market equilibrium?
A.
B.
C.
D.
Expenditures rise to $240
Expenditures rise to $270
Expenditures fall by $120
Expenditures remain at $120
17. Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 - 2.5
P and Qs = - 20 + 1.5 P respectively. The government decides to impose a price ceiling of $50 per ton.
What would be the resulting market distortion?
A.
B.
C.
D.
Shortage of 120 tons of fish.
Shortage of 175 tons of fish.
Surplus of 120 tons of fish.
Shortage of 175 tons of fish.
18. Refer to the graph above. If buyers must pay $5, quantity demanded will equal:
A.
B.
C.
D.
2.5
50
75
100
19. When an effective price ceiling is removed, we would expect the price of the good to:
A.
B.
C.
D.
increase and the quantity demanded to decrease.
increase and the quantity demanded to increase.
decrease and the quantity demanded to decrease.
decrease and the quantity demanded to increase.
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20. The Rent Control Authority of Chicago has found that total market demand for single occupancy
apartments is Qd = 400,000 - 250 P. The Authority also noted that supply is given by Qs = 200,000 + 250P.
Price of an apartment is measured in hundreds of dollars and quantity is measured in thousands of
apartments. Suppose the Authority decides to impose a rent control of $300 per single-occupant apartment,
how many people will be unable to find an apartment at that price?
A.
B.
C.
D.
325,000.
300,000.
50,000.
275,000.
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1
Week 2 Group Problems CUSP 200 Summary
Category
# of Questions
AACSB: Analytic
14
AACSB: Reflective thinking
4
AACSB: Reflective Thinking
2
AP: Yes
15
BT: Analysis
4
BT: Knowledge
2
BT: Synthesis
14
Colander - Chapter 04
15
Colander - Chapter 05
14
Difficulty: Easy
6
Difficulty: Hard
7
Difficulty: Medium
7
Learning Objective: 4-2
1
Learning Objective: 4-3
3
Learning Objective: 4-4
1
Learning Objective: 4-5
1
Learning Objective: 4-6
2
Learning Objective: 4-7
2
Learning Objective: 5-1
1
Learning Objective: 5-2
1
Learning Objective: 5-3
1
Learning Objective: 5-4
2
Learning Objective: 5-5
3
Learning Objective: 5-A
2
Skill: Application
14
Skill: Comprehension
4
Skill: Recall
2
Source: Study Guide
1
Type: Calculation
3
Type: Graph
9
Type: Word problem
8
1